Spain to cut electricity tax by half to ease inflation pain

Spain will cut the value-added tax on electricity from 10 percent to five percent to shield consumers from soaring inflation fuelled by Russia's invasion of Ukraine, Prime Minister Pedro Sánchez said Wednesday.

Spain to cut electricity tax by half to ease inflation pain
Sánchez's government already slashed the VAT rate on electricity to 10 percent from 21 percent in 2021. (Photo by Pau BARRENA / AFP)

The announcement comes after Sánchez’s Socialists were thrashed Sunday in a regional election in Andalusia, a longtime party stronghold.

Sánchez told parliament the VAT reduction, from 10 percent to five percent, would be approved at an extraordinary cabinet meeting on Saturday “to continue to protect citizens from the effects of the war.”

His government last year slashed the VAT rate on electricity to 10 percent from 21 percent to ease the impact of electricity price rises on consumers.

The latest tax cut will be part of a package of measures which will be adopted on Saturday to help consumers deal with rising inflation, which hit 8.7 percent in May, its highest level in decades.

The government did not provide further details on what measures will be adopted.

It adopted a first multi-billion euro emergency package to cushion businesses and consumers from soaring energy prices in March.

Labour Minister Yolanda Díaz has proposed slashing the price of monthly public transit passes by 50 percent and offering €300 ($315) to people hit hardest by rising prices.

READ MORE: Spain eyes €300 handouts for most vulnerable and further fuel reductions

“Inflation is hitting families hard. … The government has acted quickly and decisively, but it is still not enough,” she tweeted.

Spain’s main opposition conservative Popular Party won Sunday’s election in Andalusia in a landslide, capturing 58 seats in the 109-seat regional parliament, its first ever absolute majority in the southern region.

The Socialists won just 30 seats, its worst ever result in Spain’s most populous region.


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Youth unemployment in Spain reaches all-time low

New figures from the Spanish government reveals that youth unemployment in Spain is at an all-time low, however four out of 10 people under the age of 25 are only on part-time contracts.

Youth unemployment in Spain reaches all-time low

Although the youth unemployment rate is double that of older people in Spain, the number of under-25s unemployed in Spain under is currently at an all-time low, standing at just under 190,000, according to the latest data published by the Labour Ministry on Friday June 2nd. 

After the May unemployment data was published, the Labour Minister, Yolanda Díaz, highlighted the drop in unemployment among the youth saying “It’s the lowest figure in the entire historical series”. 

READ ALSO: Spain looks abroad to fill thousands of job vacancies

Despite this, four out of ten people under 25 work part-time, despite the fact that 38.8 percent would like a full-time contract. 

One in five temporary contracts registered in the month of May was signed by someone under 25, representing a total of 137,132, according to data from the State Public Employment Service. 

As a result of the labour reform in the first quarter of 2022 to decrease the number of temporary contracts, there has been a shift towards more permanent ones. The data released on Friday by the ministry showed that of the 1.1 million under 30s who had a temporary contract in the first quarter of 2022 and are still registered, 66.3 percent have now moved to permanent ones, that is, 746,763 young people.

READ ALSO: How a spike in permanent contracts is improving job security in Spain

However, with the increase in permanent contracts, the part-time employment rate has also increased among young people.

“It is very positive that there are fewer unemployed and more Social Security contributors, but it is just as true that we are talking about less work as a whole and, therefore, less money. A few hours a week or a few days a month are not going to enable someone to live”, the general secretary of the Unión Sindical Obrera (USO), Joaquín Pérez, said.

Specifically, among the younger population, 41.4 percent of employed people under the age of 25 work part-time, according to data from the Report on Youth and the Labour Market published on May 31st by the Ministry of Labour, which includes figures for the latest Active Population Survey (EPA).

This is one point higher than those figures registered in the first three months of last year (40.2 percent) and four points higher than that of the same period of 2019 (37.28 percent). By expanding the age range to those under 30 years of age, the percentage of young people with part-time contracts falls to 26.7 percent, although it continues to far exceed the general rate of 13.7 percent.

Women tend to be offered part-time contracts much more than men, both in the population under 25 and in those under 30. The part-time employment rate rises to 51.85 percent in women under 25 and up to 33.79 percent in those under 30, compared to ratios of 32.72 percent and 20.36 percent respectively among the men. 

Vice president of the Spanish Youth Council (CJE), Antonio Báez explains: “A person with a partial contract will obviously have a much lower salary than one who works full-time and, consequently, much more difficulties in paying rent, accessing housing, meeting living expenses or any other another type”.